Gold is set to face further pressure on domestic spot and futures markets on Friday as global prices linger near a two-week low.

Prices are headed lower on hopes that US could come up with a better jobs data, which could possibly lead to the US Federal Reserve cutting its $85 billion-a-month programme to boost the economy. Under the programme, the Fed Reserve bought bonds, thus pumping money into the economy to keep it moving.

Investors bought gold since such a strategy usually leads to inflation and therefore, they sought to protect their investments though purchase of the bullion.

Rupee Vs Dollar

In the Indian context, the rupee has been on a recovery path in the last two sessions. It could also influence gold prices since a stronger rupee against the dollar makes imports of precious metals, crude oil and vegetable oils cheaper.

Analysts view is that the rupee could climb to levels of 63 against the dollar.

China may have increased imports in August but that has been tempered by zero imports by India, following RBI stipulations that had the Customs Department restructuring its system.

Though imports could resume in a week, norms are tight that Indian imports could be lower in the months to come. Gold import norms were tightened since India faced problem with imports exceeding exports, creating trading imbalance.

Investors, too, seem to be cashing out of gold as holdings in SPDR Trust, world’s biggest exchange-traded fund for gold, dropped to 919.23 tonnes.

Spot gold, gold futures

In early Asian trade, spot gold fell to $1,373.46 an ounce and gold December contracts to $1,373.30.

In the domestic market on Thursday, gold for jewellery (99.5% purity) dropped to Rs 31,560 for 10 gm and pure gold (99.9% purity) to Rs 31,725.

On MCX, gold October contracts could trade below Rs 32,650.

Brent, WTI crude

Crude prices are likely to trade in ranges, caught between dropping stocks in the US and easing concerns over geo-political tensions in West Asia. Better jobs data could, however, could prove to be a booster.

Brent crude contracts expiring in October ruled at $115.23 a barrel and West Texas Intermediate contracts for the same month at $108.35.

The oils and oilseeds complex could head higher on fears that the US Department of Agriculture could prune soyabean production estimates following dry weather in the US that could have affected the yield.

Soyabean, crude palm oil

Chicago Board of Trade soyabean contracts maturing in November rose to $13.69 a bushel. On Bursa Malaysia Derivatives Exchange, crude palm contracts for the same month opened higher at 2,424 ringgit or $733 a tonne.

Corn, wheat futures

Weather, on the other hand, is expected to drag the grains complex lower. Forecasts of rain in crucial corn-growing areas in the US, Iowa and Illinois, will temper corn (industrial maize) prices. Wheat is set to follow in tune.

CBOT corn contracts expiring in December slid to $4.62 a bushel and wheat futures maturing in November to $6.39 a bushel.

(This article was published on September 6, 2013)
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